Microsoft’s new Office puts cloud in its corner

Originally published July 16, 2012 at 9:30 pm

Updated July 17, 2012 at 8:57 pm

Office is not only a software package, but now a service that operates from the cloud first and foremost. That means the suite of programs — along with the content people create by using it — will be stored online in the cloud, readily accessible via virtually any device.

SAN FRANCISCO — For two decades, Office has been one of Microsoft’s strongest franchises, the product most computer users turn to when they think about writing, doing spreadsheet analyses or preparing presentations.

But rival companies — namely, Google and its Google Apps — have chipped away at that franchise in recent years, especially as technology turns more mobile and social.

On Monday, Microsoft unveiled its newest version of Office, which aims to protect this lucrative franchise while adapting to the changing computing landscape.

It’s doing so by introducing Office not only as a software package, but as a service that operates from the cloud first and foremost. That means the suite of programs — along with the content people create by using it — will be stored online in the cloud, readily accessible via virtually any device.

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And it’s doing so by including more social-networking and communication tools.

“This is the most ambitious release of Microsoft Office that we’ve ever done,” Chief Executive Steve Ballmer said at a media event Monday at San Francisco’s Metreon Mall, adding that it represented a “new generation” of one of Microsoft’s most profitable products.

Rob Helm, an analyst with independent research firm Directions on Microsoft, said the moves represented Microsoft’s attempt to address how consumers — as opposed to businesses — now exert more control on the way computers are used.

“For a long time, Office’s audience has been companies,” he said. “Now those companies’ users have risen up and taken control of how they use technology, to a large extent. Microsoft is trying to get ahead of where those consumers are going.

“The question is: Are they catching up fast enough” — both with where consumers are headed and what rival companies serving them are doing, Helm said.

Among the highlights of what Ballmer and other executives introduced Monday:

• The cloud-based version of Office, called Office 365, will be expanded from its current target audience of businesses and organizations to consumers. There will be three new editions of Office 365: Home Premium, Small Business Premium and ProPlus for enterprise customers. (The Customer Preview version of Office 365 is available to try at office.com/preview.)

• Businesses and individuals still can buy the more traditional Office software licenses, which will all carry the “2013” designation, such as “Office Home and Student 2013,” “Word 2013″ and “PowerPoint 2013.”

• Both Office 365 and Office 2013 will store documents to Microsoft’s SkyDrive personal online storage service by default. That means a user’s documents are readily accessible via PC, tablet or smartphone, as well as offline.

• Microsoft highlighted the new Office’s close integration with Windows 8, including the ability to use touch instead of a mouse to perform computer functions. It also showed “inking,” the ability to use a stylus to take handwritten notes or mark up documents.

• Office Home and Student 2013 RT will be included on Windows RT, the version of Windows 8 on tablets running on ARM processors. One version of Surface, Microsoft’s branded tablet, will run on ARM processors.

• The software will have more social features, including Yammer, the business-social network service Microsoft recently bought.

• Skype will be integrated into the new Office.

Just as notable, perhaps, is what Microsoft didn’t announce, including a release date.

It also didn’t give prices for either Office 365 subscriptions or Office 2013 software licenses, saying they will be announced in the fall. And there was no announcement about a specific Office app for iPad/iOS or Android.

“I think they’re headed in the right direction,” said Helm, the analyst with Directions on Microsoft. “But technology is moving so fast it may not be possible for Office to keep up.”

An encouraging sign on that front was Microsoft’s assertion that it would deliver patches and updates more frequently in Office 365, via the cloud.

“If Microsoft starts turning out Office not every three years but every six months, its chances of catching up look lots better,” Helm said.

Several analysts said that, overall, the new features on Office look good and that they mark a step in the right direction for Microsoft, though they’re not industry-disrupting features.

“I think it was more evolutionary than revolutionary,” said Michael Osterman, president of Osterman Research, which focuses on workplace communication and collaboration tools.

“Certainly, Microsoft has had to compete against Google Apps for a while now,” he said. “This was a significant step in that competition,” and toward merging the online and offline experience.

Osterman and other analysts wondered, however, if the new features would be enough.

They also wondered if some people and businesses would be turned off because the user interface — which plays off the tile-based Metro design of Windows 8 — will be so different.

“It will be useful. It will have a nice interface. But it won’t be a compelling reason to buy Windows 8 just to get Office 2013,” Osterman said.

Michael Silver, an analyst with research firm Gartner, said, “it’s hard to say [Microsoft] is playing catch up when they still have 90 percent-plus of the office-productivity market. But they have a lot of heavy competition, especially in Google.”

The cloud integration helps, he said. “But we’re still waiting for an iPad product. Also, timing will be challenging because organizations are still working on Windows 7 and Office 2010.”

Rebecca Wettemann, vice president of technology analysis firm Nucleus Research, said the new version of Office is “interesting if I have a device that supports touch,” but otherwise “there’s little compelling here given the cost and disruption of moving to a new version of an application.”

Moving to the cloud was a smart move for Microsoft, Wettemann said, but the biggest challenge, she believes, simply will be learning the new user interface.

“It’s not that users won’t use it. The problem is that it takes them more time to find the functionality they need,” she said. “It may be a far better car, but if I switch the gas and the brake pedals, the driver’s going to have problems.”